"Global supply chain issues, commodities and price escalations" are being blamed. Photo: Supplied / New Plymouth District Council
New Plymouth ratepayers are to pay a hefty price for a $40 million budget blowout for a planned thermal dryer project at the district's wastewater treatment plant.
As a consequence, rates are set to rise an extra $92 each year, on average, for the next seven years.
Mayor Neil Holdom said the council rushed the project in an effort to secure $37m from the government's Covid-19 infrastructure spend in 2020, and did not review it properly.
"We'd done some preliminary work into replacing the thermal dryer and initial estimates were around $36m.
"We weren't going to do it, but then the Crown came in and provided that $37m and the proposal to develop that was put together quite quickly during Covid, and the rest is history.
"Global supply chain issues, commodities and price escalations and we're now looking at an $80m project."
Neil Holdom. Photo: RNZ / Robin Martin
In a council report, China's Covid lockdowns and Russia's invasion of Ukraine were also blamed. It said in 2020 the project was estimated at $43m, but by last month it had ballooned to $85m.
The wastewater plant's processes produce clean water and biosolids, which since 2002 have been treated by a thermal dryer and turned into a fertiliser called Bioboost and sold to gardeners.
But the thermal dryer is on its last legs, and a proposed project to replace it was put on hold in 2020 so the business case could be revisited and options with a lower carbon footprint investigated. It burns gas and is the council's single biggest carbon emitter.
A second component of the project included upgrading and replacing the wastewater plant's laboratory and administration block.
On Tuesday, councillors voted on a range of options for the project - from pushing ahead with it as planned, to putting it on hold indefinitely, which would have meant forfeiting the government's $37m contribution.
Not going ahead would also mean kissing goodbye to $10m already invested in the project, and raise the spectre of trucking sludge from the wastewater plant to Hampton Downs 500km away, at a cost of $2.6m per year.
Complicating matters further was an insistence from Crown Infrastructure Partners - which is managing the Covid rebuild funds - that a decision be made before February.
The councillors opted to defer part of the project for five years - the planned improvements to the plant's laboratory and administration building - and debt fund $24.5 million in new spending to push on with replacing the thermal dryer.
The outstanding sum would be budgeted for in subsequent council plans.
Sam Bennett. Photo: RNZ / Robin Martin
Holdom, pleased with the outcome, said it would come at a price for ratepayers.
"We believe that we will still be able to access the $37m in Crown Infrastructure Partners funding, but there will be a rating impact that will gradually accumulate over the next seven years and the rating impact of this project - which is circa $80 m - will be about $92 per property, per year."
Holdom said the alternative was to let the plant run down and end up trucking sludge around the country, and ultimately face a bigger bill to upgrade the treatment plant down the line.
Unsuccessful mayoral candidate Sam Bennett was the only councillor to vote against the proposal. His main concern was the proposed rates increases.
"We know now with the decision today that in the annual plan next year we are going in with double-digit rates increases, so we're already thinking of a 15 percent to maybe an 18 percent rates increase next year, and I don't think the community can afford that."
First-term councillor Bryan Vickery voted in favour of the proposal, but voiced this concern about how rushed the process had been and how little light had been shed on the initial miscalculation.
"We felt in terms of public perception it needed to go to the audit and risk committee to demonstrate we are being more prudent because the stakes are high, and while [former infrastructure manager] David Langford did a great job apply for the funding in 2020 and it made us feel good, the cost overruns are excessive and the public perception is that this is just absolute council bumbling."